Date registered: Apr 2004
Location: The BlueGrass State
Mentioned: 0 Post(s)
Quoted: 3 Post(s)
A very interesting conversation occurred while driving to the funeral yesterday. The question revolved around the economy, how this recession was in comparison to others.
I said that there are a bunch of folks who show charts and bring up numbers that try to show that this recession isn't "really" bigger, deeper or longer than others - even though we don't even know if we are on the bottom yet, how long we might stay there and exactly what vehicle we are going to use to build ourselves backup once we start growing again.
I said that, since housing is pretty much oversold that seems to be a long option, not a short one and manufacturing will take a bit of time to ramp up. Then we got into the investing question and a really big question wandered through my head.
I have been investing since I graduated highschool [long story]. I have been through five recessions, from the 73 through now. In each recession the big investor wisdom has always been, figure out the bottom and start piling money in as close to then as you can and ride it up. Braindead simple. I was taught a slight modification of that but that works well too.
In every recession the only ONE QUESTION that you asked when you started sniffing around was WHICH companies were going to perform the best as they climbed out. "Which horse to bet on out of the gate". This one is different in ONE major way. For the very first time in my lifetime I ask TWO QUESTIONS. Besides the obvious WHICH companies are going to perform the best as they climb out of the recession I now also ask which companies are going to SURVIVE. And not just the little ones. Fortune 200 companies where you have to honestly ask, will they make it through? GM, AIG, BoA, name that Airline, That is the fundamental difference in THIS recession and everyone that any of us have ever participated in.
Now when you place your bets, you don't only bet if your horse will win, place or show, you bet if it will make it around the track. THAT adds a new dimension and skillset to the game.
Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.